DEWES v IAG NEW ZEALAND LIMITED [2019] NZHC 2899

DEWES v IAG NEW ZEALAND LIMITED [2019] NZHC 2899 [7 November 2019]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2017-409-662[2019] NZHC 2899BETWEEN CATHERINE FRANCES DEWES,ROBERT DENTON GREEN and DIANAROSEMARY SHAND (as trustees of theDewes Green Family Trust)PlaintiffsAND IAG NEW ZEALAND LIMITEDFirst DefendantAND MAX CONTRACTS LIMITEDSecond DefendantAND MAX EQ LIMITEDThird DefendantAND ORANGE H MANAGEMENT LIMITED(formerly Hawkins Management Limited)(In Receivership and in Liquidation)First Third PartyAND ORANGE H GROUP LIMITED (formerlyHawkins Management Limited) (InReceivership and in Liquidation)Second Third PartyAND MAX CONTRACTS LIMITEDThird Third PartyAND QBE INSURANCE (AUSTRALIA)LIMITEDFourth Third PartyHearing: 31 October 2019 (telephone conference) and on the papersAppearances: C F Dewes for PlaintiffsN S Gedye QC and O Collette-Moxon for First DefendantR Smedley for Second and Third Defendants and Third ThirdPartyNo appearance for First Third Party and Second Third PartyD McLellan QC and L R Green for Fourth Third PartyJudgment: 7 November 2019JUDGMENT OF ASSOCIATE JUDGE LESTERThis judgment was delivered by me on 7 November 2019 at 2.00pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy Registrar7 November 2019[1] The fourth third party, QBE Insurance (Australia) Ltd ("QBE") applies forleave to appeal my decision transferring this proceeding to the CanterburyEarthquakes Insurance Tribunal ("the Tribunal"). QBE has argued in the transferapplication that the third party proceedings it faces should be recognised asa standalone proceeding. Once seen as a standalone proceeding, QBE's submission isthat the proceeding against it is not one eligible for transfer to the Tribunal pursuantto the terms of the Canterbury Earthquakes Insurance Tribunal Act 2019 ("the Act").[2] That ineligibility arises from the fact that the third party claim against QBE isnot a claim between a policy holder and an insurer, that being one of the eligibilitycriteria under s 8 of the Act. The claim QBE faces is based on the Law ReformAct 1936.[3] I took the view that in enacting the Act, Parliament did not intend to use theterm "proceedings" in s 16 of the Act which governs transfer of proceedings tothe Tribunal in the nuanced way adopted by QBE and that the jurisdiction to transferin s 16 relates to an entire proceeding and does not permit a proceeding to betransferred in part.Leave to appeal[4] Leave is required by virtue of s 56(3) of the Senior Courts Act 2016. Counselwere agreed on the applicable principles and I adopt Mr McLennan QC's, counsel forQBE's, summary:4. The provision was considered by Dobson J in A v Minister of InternalAffairs who identified the following (obiter) considerations:(a) A high threshold exists for the granting of leave. Anallegation of error of law or fact is generally insufficient.An application should raise an arguable error.(b) Leave should only be granted where the circumstanceswarrant incurring further delay.(c) The alleged error should be of general or public importancethat requires determination, or otherwise be of sufficientimportance to the applicant to outweigh the lack of anygeneral or precedential importance.5. These observations were adopted and elaborated on by Fitzgerald J inFinewood Upholstery Ltd v Vaughan:(a) The requirement for leave to appeal should serve asa "filtering mechanism" to ensure that unmeritorious appealsof interlocutory orders, or appeals of interlocutory orders ofno great significance to either the parties or more generally donot unnecessarily delay the proceedings in which the orderswere made.(b) Ultimately, the court hearing an application for leave to appealfrom an interlocutory order will need to stand back and assess,in a pragmatic and realistic way, whether the interests ofjustice are served by granting leave to appeal.6. In Li v CE, MBIE, Palmer J summarised the approaches taken in theabove cases and added the observation that "the wider purpose behinds 56(3) is to lessen tactical delays and enhance the efficiency of theadministration of justice". His Honour considered that an applicationis likely to be granted if:(a) the appeal is not likely to be overtaken by the substantivehearing or cannot otherwise be considered as effectively in thecontext of an appeal of the substantive decision; or(b) the appellant is likely to be prejudiced by a postponement tothe substantive appeal; or(c) the appeal may be dispositive of the case in law or asa practical matter; and(d) the arguments in the appeal are capable of bona fide andserious argument; and(e) the issue on appeal concerns a decision of sufficientsignificance to the parties or a question of law or generalprinciple of sufficient importance as to outweigh the cost anddelay of the appeal.(footnotes omitted)Assessing the application[5] Gendall J in Smith v Claims Resolution Services Ltd, said in respect ofassessing applications for leave to appeal:1There is always an inherent tension in being the Judge who delivered thejudgments at issue and then being required to consider whether thosejudgments raise arguable errors of law or fact.1 Smith v Claims Resolution Service Ltd [2019] NZHC 2738 at [29].[6] In assessing this application, I have to consider the merits of the appeal, somuch being inherent in the leave process being a filter, but not apply so fine a filter asto exclude a reasonably arguable appeal.[7] QBE wishes to raise two points:(1) that there is no jurisdiction under s 16(2) of the Act to transfer the thirdparty claim against QBE to the Tribunal as it is not a qualifying claimunder the Act; and(2) even if jurisdiction exists, the discretion to transfer should have beenexercised in QBE's favour.[8] The first proposition above is that it is not possible at all to transfer a third partyclaim to the Tribunal.[9] The second proposition assumes that there is jurisdiction to transfer part ofa proceeding to the Tribunal leaving the third party claim in this Court while the claimbetween the home owner and their insurer goes to the Tribunal.[10] In my judgment, I held there was no jurisdiction to transfer a proceeding inpart.2 If there was to be a transfer then the proceeding in its entirety was transferred,including all third party claims.[11] I set out again s 16(2) of the Act, in the same manner as I did in my firstjudgment:An order to transfer proceedings may be made under subsection (1) only if –(a) the proceedings meet the eligibility criteria for a claim under section 9(however, the proceedings may also include additional parties tothose referred to in section 8, but may not include a class action );and(b) the other party or parties to the proceedings have been givena reasonable opportunity to comment; and2 Dewes v IAG New Zealand Ltd & Ors [2019] NZHC 2270.(c) the Judge making the order believes that the transfer is in the interestsof justice.(emphasis added)[12] I concluded that the highlighted words above were not restricted to otherdefendants, as suggested by QBE, but included all parties. I noted that under theHigh Court Rules 2016 a third party is a party to the proceeding to which they havebeen added.3[13] I found support for my view that s 16 did not create the ability to transfer partof a proceeding in s 27(1)(d) of the Act, which confers on the Tribunal the power to"decide whether parties need to be joined or removed and, if so, make an order undersection 11 to this effect".[14] Counsel for IAG, in opposing the present application, referred to s 11(1) of theAct which provides:If the tribunal considers it necessary for the fair and speedy resolution ofa claim, it may order that –(a) a person be joined as a third party respondent:(b) a party be removed.[15] In my view, if the only claim that could be transferred to the Tribunal is thatbetween a policy holder and their insurer (QBE's position), it would mean s 11(1)(b)could only apply to third parties who had already been joined by the Tribunal unders 11(1)(a).[16] IAG also relied on s 45 of the Act which provides that the Tribunal may decideany liability of any party to any other party.[17] IAG referred to a Minute issued by the Tribunal in this matter where theTribunal noted that proceedings in the Tribunal are not as "linear" as they are in thisCourt, it not being possible in this Court for a plaintiff to obtain relief directly againsta third party.3 High Court Rules 2016, r 4.7(1).[18] Accordingly, in my view, the Act contemplates the presence of third parties inthe Tribunal. With the Act being passed at a time when there had been litigation beforethe Courts in some cases for years (the present case having commenced inSeptember 2017), that such proceedings may have involved third parties would havebeen known to Parliament.[19] Can it have been intended by Parliament that on a transfer of proceedings allthird parties would drop off with there then to be a further process in the Tribunal tojoin them back in?[20] In my view, that process would be inconsistent with what is the guidingprinciple of the Tribunal, that is the fair and speedy resolution of claims. It would alsopotentially prejudice defendants who had joined third parties as of right in this Courtbut would not have that right in the Tribunal.[21] Mr McLennan in oral submissions developed an example based onthe assumption that QBE had in a case joined its reinsurer. The argument was that thedetermination of QBE's claim against a (say) London based reinsurer in the Tribunalwould be stretching the purposes of the Act to breaking point. Having such a claim inthe Tribunal, it was said. would be inconsistent with the fair and speedy resolution ofthe homeowner's claim.[22] Mr McLennan said that there was no legal difference between the hypotheticalcase involving the joinder of a reinsurer and the present case involving the joinder ofQBE.[23] However, in my view the situation mooted by Mr McLennan is directlyaddressed by s 11(1)(b) of the Act.[24] I consider Parliament intended that it would be the Tribunal that makes thedecision whether removing a third party is necessary for the fair and speedy resolutionof the claim. In my view, the structure of the Act means that it is not for this Court toproceed on the basis that Parliament intended that existing third party claims cannotbe transferred to the Tribunal. That is because the Act, in my view, contemplatestransfer and the future role of third parties in the proceeding (if any) being determinedby the Tribunal.[25] I remind myself it is not my role to determine the merits of the proposed appealand I am only to determine whether it is reasonably arguable. However, I do not findin the applicant's submissions an answer to the statutory context points raised in myjudgment and in IAG's submissions.[26] I do not consider the reference to the Parliamentary materials, raised for thefirst time in QBE's submissions, inconsistent with the view I have adopted. QBEsubmitted the following statutory materials to support its position:18. In the In-Committee debate of 8 May 2019 Stuart Nash explained thatthe purpose of the Tribunal was to resolve disputes between insurersand policyholders, not third parties. The context to the comment wasthat another Member had raised an issue that, under what is now s 11of the Act, if two or more parties are removed from the Tribunal sothat only a third party claim remains, that third party claim cannot bedealt with by the Tribunal. Mr Smith wanted the Bill amended so thatthe Tribunal would retain jurisdiction over third party claims if theinsured-insurer claim was removed.19. In response Mr Nash explained the purpose behind s 11 and why thegovernment would not amend it:"Hon STUART NASH: OK. Let me continue.Supplementary Order Paper 227-we do not support this either.Let me outline the reasons why. The intent of the tribunal isto primarily resolve disputes between insurers andpolicyholders, not third parties. The intent of the tribunal is to primarily resolve disputesbetween insurers and policyholders, not third parties. If themain dispute involved a third party, and does not involvea policyholder or an insurer or EQC, this disputed should bedealt with in another forum.(Emphasis added)20. This passage is consistent with, and assists to contextualise, thepurpose of the Act as set out in section 3, which is to provide "fair,speedy, flexible, and cost-effective services for resolving disputesabout insurance claims arising from the Canterbury earthquakes".A third party dispute between an insurer and its project coordinator isnot 'a dispute about an insurance claim'.[27] The Act contemplates in s 11(1) that the presence of third parties may not beconsistent with the fair, speedy and flexible determination of a policy holder's claimand thus the Tribunal is expressly empowered in those circumstances to remove thatparty. The Act itself provides the answer to the submission made by QBE. Ifa proceeding did primarily involve a dispute between a policy holder and an insurer,then nonetheless it is still the policy holder's decision to transfer such to the Tribunal.As transfer of a proceeding in this Court can only be initiated by a policy holder it isup to them to assess whether the presence of third parties will make transfer to theTribunal undesirable. That will not impact on the Tribunal's powers under s 11(1) butthe fact that a policy holder is content to seek transfer of a proceeding which involvedthird parties is a practical answer to the submission that transfer with third parties willprevent policy holders achieving the fair and speedy resolution of their claims.[28] Nor can I see it having been intended by Parliament that the starting positionfor a defendant in a transferred proceeding to the Tribunal would be to conductproceedings in the Tribunal and the third party proceedings in the Court from whichthe transfer occurred. That would create significant practical case managementdifficulties for the third party proceedings requiring the proceedings in both Tribunalsto proceed at the same rate. That a defendant being asked to consent to an applicationto transfer would be put into that position in a case where they joined a third party mayalso create a disincentive for a defendant to consent to transfer. Such a defendant maywell argue that it is unjust that they should lose the benefit of a claim against a thirdparty which they were able to commence as of right when in the Tribunal they do nothave a similar right.[29] QBE also relied on commentary on the Bill as reported from the Governanceand Administration Committee and its reference to what is now s 16 of the Act. Thecommentary said:We also recommend amending clause 16 to allow applications to be madewhere there are more than two parties (such as multiple plaintiffs ordefendants), but this would not extend to class actions.[30] QBE submitted:While not conclusive, this passage is consistent with QBE's submission that"parties" in clause 16 (and now s 16) is to be construed as meaning otherplaintiffs or defendants, as opposed to parties against whom the plaintiff seeksno remedy. At the very least, the argument is a serious one that requires fullargument in the Court of Appeal.[31] I do not accept QBE's submission. For a start, even in the commentary thereference is only "such as". Had Parliament intended s 16(2) to only apply todefendants then that is what the Act would have said. I appreciate that QBE does notput this point forward as being conclusive, but in my view the language of s 16(2)(a)is clear. It is parties additional to those referred to in s 8. The parties in s 8(1) are thepolicy holders and insurers. It is the policy holders and insurers who will be theplaintiff and the defendant. Parties in addition to the policy holder or insurer cannotthen be the plaintiff or defendant as they are the parties named in s 8(1). The languagein the section to me is plain and I do not see the Parliamentary materials as alteringthat plain meaning.[32] Are the purposes of the Act better served by construing the Act as enabling theCourt to decline to transfer third party proceedings to the Tribunal? The purposes ofthe Act are expressly stated in s 3 which provides as follows:The purpose of this Act is to provide fair, speedy, flexible, and cost-effectiveservices for resolving disputes about insurance claims for physical loss ordamage to residential buildings, property, and land arising from theCanterbury earthquakes.[33] Is this Court better placed than the Tribunal to determine whether a third partyclaim should be heard with the policy holder's claim? I do not think it is reasonablyarguable that the objectives of the Act are better served by that decision being able tobe made in this Court. This Court is not attuned to the case management processes ofthe Tribunal nor its ability to adopt inquisitive processes.[34] Again, the Act in s 11 provides a safeguard to policy holders should thepresence of additional parties be inconsistent with the purposes of the Act. In my view,the Act is geared towards the role of third parties in the Tribunal being determined bythe Tribunal and it is more efficient that the Tribunal exercise that role on the entireproceeding being transferred to the Tribunal rather than third party claims beingapproached piecemeal.[35] I have not been persuaded that there is a reasonably arguable case that s 16(2)prohibits the transfer of third party proceedings to the Tribunal. Nor am I persuadedthat there is a reasonably arguable case that s 16(2) permits this Court to transfer partof a proceeding to the Tribunal.[36] To the extent that QBE's alternative ground of appeal depended on there beingthe ability to transfer part of a proceeding then that ground in my view is not arguablefor the reasons just given.[37] If the alternative argument is that on the meaning I gave the Act, my decisionto transfer was nevertheless wrong, I do not accept that that argument warrantsa second appeal. QBE submitted that I failed to consider the prejudice to the plaintiffsthat resulted from the transfer of the third party proceeding. I do not accept that isarguable. The plaintiffs initiated the transfer of the proceeding to the Tribunal andwere aware of the debate relating to the third parties and took no stance on that. Theplaintiffs are now self-represented and attended the telephone conference at whichcounsel addressed their submissions in support of the application for transfer and madeno submissions in respect of the application for leave. In those circumstances, I canonly conclude that the plaintiffs have no concern with the third parties being involvedin the proceeding.[38] QBE then makes the submission that in my judgment I failed to recognise thatQBE would be bound by the Tribunal's findings. At para [25] of the judgment I saidthat whether a finding in the Tribunal would as a matter of law bind QBE wassomething I did not need to determine, but then referred to the practical benefits ofhaving QBE as a party, including in relation to alternative dispute resolution.[39] There is then the submission that on appeal QBE would submit that I erred byeffectively disregarding the split trial arrangements that had been ordered in this Court.In this Court, IAG and QBE had agreed by way of joint memorandum that the thirdparty proceedings would be determined separately from the plaintiffs' claim againstIAG. That was the position at the time I issued my decision QBE seeks to appeal.IAG has recently reversed its position regarding the split trial. That IAG has changedits position in that regard after my judgment does not make my judgment in respect ofthat issue wrong. That there had been an agreement to the staged hearing of the thirdparty claim was known at the time of my judgment and at para [21] I referred to theTribunal's wide-ranging case management powers being wide enough for the Tribunalto direct a separate or staged hearing of issues.[40] QBE submitted: it is arguable that this Court erred by allowing the plaintiffs' transferapplication to disturb the Court's order that issues between IAG and QBE betried separately.[41] I do not accept that. Once a proceeding is transferred to the Tribunal, casemanagement directions in this Court are overtaken by that fact. The Tribunal's handsare not tied by existing case management directions in this Court given the differentprocedures in the Tribunal.[42] In respect of this aspect of the application for leave, I do not accept that theissue as to my exercising a discretion to transfer the proceeding raises an issue ofgeneral or public importance that requires determination.[43] In respect of the first issue, that is the meaning of the Act, I do consider that tobe a matter of general or public importance as I accept the point made at para 2(c)(i)of the application for leave to appeal that my decision has set a precedent effectivelyrequiring that each time a policy holder seeks an order transferring a proceeding thatthe entire proceeding, including third party claims, will be transferred.[44] Returning to the alternative ground of appeal, as I have said, I do not considerthe exercise of my discretion in this particular case to be a matter of general or publicimportance or that it would warrant the delay of an appeal (noting QBE's undertakingto advance such an appeal expeditiously). In respect of this issue, I do not considerthat the interests of justice would be served by granting leave to appeal.[45] It follows that the application for leave to appeal is dismissed.[46] Costs are reserved._____________________________Associate Judge LesterSolicitors:Lane Neave, ChristchurchDuncan Cotterill, AucklandAnthony Harper, ChristchurchHazelton Law, WellingtonCopy to counsel:N S Gedye QC, AucklandL R Green, Barrister, Auckland